Word: interest
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Dates: during 2000-2009
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Observers say Build America Bonds have lowered borrowing costs for states and other local governments. The bonds have renewed and expanded investor interest in the muni-bond sector. And by getting money into the hands of cash-strapped local governments, the bond program has saved or even boosted jobs, stimulating the economy. Many investors are already lobbying to extend the program, which is not expected to close until...
Many credit BABs with reviving the muni-bond sector. Since the program was announced in mid-February, muni-bond interest rates, which are what local governments have to pay to borrow, have fallen dramatically. The typical municipality is now paying 3.7% when they issue a bond, down from as high as 4.5% in January, before the BABs program was announced, according to Barclays Capital. Some of the drop in yields reflects the improvement in the economy in general, and the easing of the credit crunch. But muni-bond-market observers say BABs have played an important role as well...
...BABs have made muni bonds more attractive to pension funds and other nonprofit (i.e., tax-free) investors. And that new demand is driving down the yields on traditional muni bonds because there are relatively fewer of them issued. BABs, unlike traditional munis, are taxable. For most individual investors, the interest-rate difference is a wash - a high net worth investor would owe the extra yield they get from the BAB back in taxes, so they'd wind up with roughly the same after-tax yield as if they had bought a lower-yielding tax-free muni...
...only question about BABs is the cost. So far local governments have issued just over $50 billion in BABs with an average yield of just under 6%. That means the federal government is paying just over 2% interest on that debt a year, or about $1 billion. Many estimate that the volume of BABs could triple over the next year. What's more, most of these bonds are issued with a term of 15 or 30 years. That means by the end of 2010 the federal government could end up being on the hook for as much as $90 billion...
...There are so many issues for modern feminism to deal with. It’s unavoidable that there will be clashes of interest,” she said. “The good news is that there’s so much work to do [and] there doesn’t have to be competition. We need to work on all of them...